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In timely and incisive analysis, our experts parse the latest development news and devise practical solutions to new and emerging challenges. Our events convene the top thinkers and doers in global development.

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Vijaya Ramachandran is a senior fellow at the Center for Global Development. She works on the impact of the business environment on the productivity of firms in developing countries, and is the coauthor of an essay titled "Development as Diffusion: Manufacturing Productivity and Africa's Missing Middle,” published in the Oxford Handbook on Economics and Africa. Vijaya is also studying the unintended consequences of rich countries’ anti-money laundering policies on financial inclusion in poor countries. She has published her research in journals such as World Development, Development Policy Review, Governance, Prism, and AIDS and is the author of a CGD book, Africa’s Private Sector: What’s Wrong with the Business Environment and What to Do About It. Prior to joining CGD, Vijaya worked at the World Bank and in the Executive Office of the Secretary-General of the United Nations. She also served on the faculties of Georgetown University and Duke University. Her work has appeared in several media outlets including the Economist, Financial Times, Guardian, Washington Post, New York Times, National Public Radio, and Vox.

More than 25% of businesses surveyed in some of Africa’s biggest economies cited losing double-digit sales due to power outages
Contact:
Holly Shulman
Center for Global Development
+1 (202) 416-4040
HShulman@cgdev.org
Washington – In Sub-Saharan African countries with unreliable power, outages cost some companies as much as 31 percent in sales, according to a new study released today by the Center for Global Development.
Researchers from the Center for Global Development (CGD) examined data from more than 3,000 firms in 37 African countries in an effort to examine how businesses across Sub-Saharan Africa respond to frequent power outages, and what it means for their businesses’ bottom lines and growth prospects.
“While there’s a lot of effort put into providing solar panels and generators to African households to power their daily lives, to actually change the economic development equation in Africa we must focus our efforts on the energy infrastructure that can power businesses,” said Vijaya Ramachandran, the study’s lead author and a senior fellow at CGD. “We found that unreliable power can have a major impact on businesses, dampening their growth prospects and undermining job creation opportunities.”
The study found:
In some of the continent’s largest economies like Nigeria, Angola, and Ghana, more than 25% of businesses lose double-digit sales due to power outages—with some firms averaging losses of 31%.
The largest grouping of firms are just surviving. Thanks to a heavy reliance on generators their sales are mostly unaffected by power outages, but they average just 3% growth.
Across the continent, some firms have grown rapidly despite frequent power outages—even in very poor countries.
In middle-income countries, especially in Southern Africa, many firms suffer relatively limited power outages and don’t see significant effects on sales.
The hardest-hit firms average more than 200 hours without power each month, while even the least-affected firms average more than 10 hours per month.
Some individual firms report losing over 70% of their sales.
“Of course, there’s no single story of how African businesses cope with unreliable power, but it’s clear that across the continent, a huge number of firms suffer high costs and lost sales,” said Ramachandran. “Better power infrastructure could enable business growth, create jobs, and produce better economic outcomes for the region.”
You can read the full study at https://www.cgdev.org/publication/how-do-african-firms-respond-unreliable-power-exploring-firm-heterogeneity-using-k-means.
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Moving beyond low income countries makes sense for an institution focused on ending extreme poverty. But does the IFC follow through by focusing on the countries that are home to the extreme poor? Not really.

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The immediate aftermath of a natural disaster, such as that the typhoon which devastated part of the Phillipines on Friday, can bring out the best of the global community. There will come a time to discuss how we can do more to prevent the environmental changes which make such events more likely; but the immediate priority is to get water, food and shelter to people who urgently need it.

China’s presence in Africa is, beyond dispute, large in both trade and what can be called official finance to Africa. But how large, exactly? A new database from the College of William and Mary brings additional resources to help answer the question. This paper describes the new database, its key findings, and its possible applications and limitations of the data, which is being made publicly available for the first time.

Money laundering, terrorism financing and sanctions violations by individuals, banks and other financial entities are serious offenses with significant negative consequences for rich and poor countries alike. Governments have taken important steps to address these offenses. Efforts by international organizations, the US, UK and others to combat money laundering and curb illicit financial flows are a necessary step to increase the safety of the financial system and improve security, both domestically and around the world. But the policies that have been put in place to counter financial crimes may also have unintentional and costly consequences, in particular for people in poor countries. Those most affected are likely to include the families of migrant workers, small businesses that need to access working capital or trade finance, and recipients of life-saving aid in active-conflict, post-conflict or post-disaster situations. And sometimes, current policies may be self-defeating to the extent that they reduce the transparency of financial flows.

The World Food Programme has world-class logistics, but its ability to manage financial risk is extremely limited. The WFP should consider implementing a targeted hedging pilot strategy for increased predictability. Greater commitments of untied cash from donors and support for the proposed Food Security Trust Fund at the World Bank would help.

Two years ago, a 7.0 magnitude earthquake struck Haiti, plunging an already poor and unstable country into complete and utter chaos. In the days and weeks that followed, international responses and donations were overwhelming. Yet almost all of the assistance provided to Haiti has bypassed its government, leaving it even less capable than before. Humanitarian agencies, NGOs, private contractors, and other non-state service providers have received 99 percent of relief aid—less than 1 percent of aid in the immediate aftermath of the quake went to public institutions or to the government. And only 23 percent of the longer-term recovery funding was channeled through the Haitian government. Figure 1 shows the breakdown of relief aid from all donors to Haiti, by recipient.

What's going to happen in the world of development in 2018? Will we finally understand how to deal equitably with refugees and migrants? Or how technological progress can work for developing countries? Or what the impact of year two of the Trump Administration will be? Today’s podcast, our final episode of 2017, raises these questions and many more as a multitude of CGD scholars share their insights and hopes for the year ahead.

The need for infrastructure improvements is a top-tier economic, political, and social issue in nearly every African country. Although the academic and policy literature is extensive in terms of estimating the impact of infrastructure deficits on economic and social indicators, very few studies have examined citizen demands for infrastructure.

Many countries in Africa suffer high rates of underemployment or low rates of productive employment; many also anticipate large numbers of people to enter the workforce in the near future. This paper asks the question: Are African firms creating fewer jobs than those located in other parts of the world? And, if so, why?

Africa’s industrial progress has been disappointing. Part of the reason is that labor costs are higher than one might expect, given GDP per capita. Alan Gelb, Christian Meyer, and Vijaya Ramachandran distill the policy lessons.

China’s presence in Africa is, beyond dispute, large in both trade and what can be called official finance to Africa. But how large, exactly? A new database from the College of William and Mary brings additional resources to help answer the question. This paper describes the new database, its key findings, and its possible applications and limitations of the data, which is being made publicly available for the first time.